A new report from Citi's Anthony Yuen and Ed Morse challenges that view.

"Citi expects [a] combination of factors to slow the power sector's use of coal, pointing to a possible flattening or peaking before 2020," they wrote.

Whoa.

The firm says the four main drivers of the phenomenon will be:

Serious efforts to control air pollution

Slowing Chinese GDP

The natural gas revolution, and greater investment in nuclear and renewables

More investment in efficiency and clean coal

Here's the scenario outlook breakdown:

Citi

But let's quantify each of the four bullets.

Air quality control

China is ready to get serious about wrangling the world's worst air quality problems, Citi says, and the Party's "12th Five-Year Plan For Air Pollution Prevention And Control In Key Areas" calls for speeding up the mothballing of inefficient power plants including coal generators. The Ministry of Environmental Protection also recently suspended all environmental impact assessments.

GDP

Citi has imagined a scenario where GDP slows to 5.5% in 2020 from 7.4% in 2013, the result of a whole slew of factors including peak population growth, the dismantling of the state-sponsored economy, and a more credible exchange rate.

That of course will lead to natural lower energy demand, which will filter through to coal.

But power demand growth already trails GDP by 200 bps and is likely to fall farther behind. "While recent data are not sufficient to definitively declare a trend, there are strong reasons to believe it could be the beginning of one. It is China’s explicit policy to both rebalance growth towards less energy intensive sectors such as consumption and promote energy efficiency throughout the economy."

Natural gas and nuclear

China has set a goal of 100 gigawatts of natural gas capacity by 2020 (U.S. stands at about 105 gw).

The expansion of retail price reform that started in the two southern provinces of Guangdong and Guangxi in tying gas prices to Shanghai fuel oil and LPG prices will raise the price that producers receive for natural gas." China also already has 1 billion cubic feet of "small-scale" liquefied natural gas capacity (mostly in places with poor pipeline access).

Meanwhile, China scaled back its nuclear capacity after Fukushima to 58 gigawatts, but the country is already more than three-quarters of the way there (U.S. nuke capacity=101 gw).

Finally, China wants 103 gigawatts-worth of solar by 2020. And thanks to bureaucratic reforms, China has managed to cut the time it took subsidy payments to reach recipients to three months from more than two years. So it's not an unreasonable goal.

New, better, different coal

"Clean coal" may be an oxymoron at heart, but the concept is not completely groundless, and Citi says China's newest coal plants operate at 45% efficiency, compared with an EU average of 38%.

And as more plants are retired, efficiency will only increase. Here's the chart:

Citi

As you can see, China will still have a ton of coal plants into 2014. But at least there'll be more efficient ones in place.

To prove they're not the only ones thinking China coal use will peak, Citi also posts the following chart from the U.S. Department of Energy's Lawrence Berkeley National Laboratory that says efficiency gains will be so aggressive that coal use will peak after 2020 no matter how fast China is growing:

...an economic transition in China that brings 2020 GDP growth to 5.5% in 2020, for an average 2013-2020 GDP growth of 6.6%, could drive carbon emissions down to 3.82-billion tons – lower than the 2013 average and more than 1.1-billion tons/year lower than IEA’s “Current Policy,” ie, business-as-usual (BAU) projection.

There's a chance that recent drops in coal prices could dent some of this, but Citi says it's unlikely. "Ultimately what drives prices lower in both cases is lower than-expected demand, whether it be cheap US shale gas reducing US coal demand, or much lower Chinese coal demand growth and imports."